Fears were fueled Tuesday by word that Libya's ports were closed and that much of its oil production and natural gas shipments had been suspended by the Western companies that operate the country's fields and pipelines.

Crude oil prices soared to their highest levels in more than two years, rising 8.6 percent to $93.57 a barrel for March delivery in trading on New York exchanges. The price of Brent crude, an equally important benchmark, stood at $105.78 a barrel in London.

With high oil prices threatening to damage the still-fragile economic recovery, stock markets fell. The Dow Jones industrial average slid 178.46 points, or 1.4 percent, to 12,212.79, its biggest point and percentage drop since Nov. 16. The broader Standard & Poor's 500-stock index tumbled 27.57, or 2.1 percent, to 1,315.44, the biggest drop since Aug. 11.

The anxiety about Libya and the wider Arab world drowned out a bit of good U.S. economic news, as U.S. consumer confidence hit a three-year high of 70.4 in February, well above the 66 expected by economists. But investors were looking to the Middle East.

"Obviously it's not just Libya that's at play here," said David A. Wyss, chief economist at Standard & Poor's. "It's the whole area, and that's where the oil comes from." He said that if unrest continues to spread throughout the region, "those $4 [a gallon gasoline] prices in 2008 may look cheap."

With the Middle East protest movement widening to Libya, oil and gas supplies have been curtailed for the first time. The North African nation, a member of the Organization of the Petroleum Exporting Countries, exports about 1.2 million barrels a day of oil and produces 1.5 million, nearly 2 percent of world supplies. It also exports natural gas through a pipeline half owned by Italian oil giant ENI. The pipeline, which ENI said was temporarily closed, usually supplies about 10 percent of Italy's gas needs.

Repsol, a Spanish oil company, said it had shut down its entire 35,000 barrels a day of oil and gas production in Libya because of safety concerns.

ENI, which produces about one-third of Libya's oil, said that some of its oil and gas production activities had been temporarily suspended, but the company added that none of its facilities has been damaged. It also said that it would be able to meet the gas needs of its Italian customers.

In Saudi Arabia, where officials from more than 90 nations gathered to discuss petroleum price fluctuations, oil minister Ali al-Naimi said at a news conference that the kingdom has 4 million barrels a day of spare production capacity, higher than the estimates of some private oil analysts.

That provided little solace to international investors, who poured money into 10-year U.S. Treasury securities. Those securities rose in price, sending the yield down 13 basis points to 3.46 percent.